TMP.objres.392.pdf

7/29/2019 TMP.objres.392.pdf

1/111

LAPPEENRANTA UNIVERSITY OF TECHNOLOGY

Department of Business Administration

Knowledge management

WORKPLACE ADJUSTMENT OF AN EXPATRIATE MANAGER:

IDENTIFYING KEY COMPONENTS FROM A SOCIAL CAPITAL

PERSPECTIVE

The subject of the thesis was approved by the council of Business

Administration on the 11th of October 2005.

Examiner & Supervisor: Ph.D. Jianzhong Hong

Examiner: Professor Kirsimarja Blomqvist

Lappeenranta, October 2nd, 2006

Jukka Vasama

Sarvimentie 32 A

04200 Kerava

Tel. +358 400 255 927


2/111

ABSTRACT

Author: Jukka Antero VasamaNimi: Workplace adjustment of an expatriate

manager: Identifying key components from a

social capital perspective

Department: Department of Business AdministrationYear: 2006

Master's thesis. Lappeenranta University of Technology.

96 pages, 7 tables, 4 figures

Examiner: Professor Kirsimarja BlomqvistExaminer & Supervisor: Ph.D. Jianzhong Hong

Keywords: Expatriate manager, Finland, guanxi, Hong

Kong, international workplace adjustment,social capital

Building on the framework of international adjustment and thecomplementary nature of the social capital theory, this study examineshow a Finnish expatriate manager creates a well functioning socialnetwork in a Hong Kong workplace. The thesis work approaches theissue by using Nahapiet and Ghoshal's (1998) three dimensional modelof social capital. Research is conducted by reviewing published studiesand reflecting the gathered information to the interview data. Reviewing

social capital, international adjustment literature, traditional expatriate'sperformance predictors and stressing the concept of guanxi (Chinesepersonal ties) the revised theory implies that social capital has asupportive role in the international adjustment literature. The threedimensional sorting of social capital is empirically used as a tool toreflect interview data. The empirical results show that the social networkadjustment is related to the expatriate's ability to handle assistant andrestrictor characteristics of creation of social capital. Furthermore,expatriate needs to recognise valid performance predictors typical forthe host-country and also expatriates own relevant personalcapabilities.


3/111

TIIVISTELM

Tekij: Jukka Antero VasamaTutkielman nimi: Ulkosuomalaisen esimiehen sopeutuminen

kohdemaan typaikalle: Avaintekijiden

tunnistaminen sosiaalisen poman

nkkulmasta

Osasto: Kauppatieteiden osasto

Vuosi: 2006

Pro Gradu -tutkielma. Lappeenrannan teknillinen yliopisto.

96 sivua, 7 taulukkoa, 4 kuvaa

Tarkastaja: Professori Kirsimarja Blomqvist

Tarkastaja & Ohjaaja: KTT Jianzhong Hong

Avainsanat: Guanxi, Hong Kong, kansainvlinentypaikkasopeutuminen, ulkosuomalainenesimies, sosiaalinen poma, Suomi

Perustaen tutkimuksen kansainvlisen sopeutumisen teoreettisellerungolle tydenten sit sosiaalisen poman teorialla, tm tutkielmatutkii kuinka johtoasemassa oleva ulkosuomalainen luo hyvin toimivansosiaalisen verkoston hong kongilaisella typaikallansa. Tutkielmalhestyy aihetta Nahapietin ja Ghoshalin (1998) kehittmn sosiaalisenpoman kolmen ulottuvuuden mallin avulla. Tutkielmassakirjallisuudesta haettua teoriaa kytetn tutkimusta varten tehtyjen

haastattelujen analysointiapuna. Tutkimalla sosiaalista pomaa,kansainvlisen sopeutumisen kirjallisuutta, ekspatriootin perinteisimenestystekijit ja guanxia (kiinalaisten henkilkohtaisia siteit) tmntutkimuksen teoriaosuus implikoi, ett sosiaalisella pomalla tulisi ollatydentv rooli kansainvlisen sopeutumisen kirjallisuudessa.Sosiaalisen poman kolmen ulottuvuuden mallia kytetn pohjanaempiirisen datan analysointiin. Tutkielman empiiriset tulokset osoittavat,ett typaikan sosiaaliseen verkostoon sopeutuminen liittyyexspatriootin kykyyn ksitell estvi ja mahdollistajia sosiaalisenpoman luontiin vaikuttavia tekijit. Lisksi sopeutuminen vaatiiexspatriootin tunnistavan kohdemaalle tyypillisi exspatriootin

menestystekijit ja ekspatriootin omia trkeit henkilkohtaisiaominaisuuksia.


4/111

TABLE OF CONTENTS

1 INTRODUCTION 11.1 Overview 1

1.2 Objectives 3

1.3 Research framework and structure 5

1.4 Restrictions 8

1.5 Prologue to the international adjustment literature 10

2 SOCIAL NETWORK ADJUSTMENT 14

2.1 Traditional adjustment process 142.1.1 Workplace performance predictors 17

2.2 Bringing social capital into adjustment process 23

3 COGNITIVE DIMENSION 27

3.1 Identifying cognitive dimension 28

3.2 Hofstede's cultural dimensions 29

3.2.1 Individualism / collectivism 30

3.2.2 Uncertainty avoidance 31

3.2.3 Power distance 31

3.2.4 Masculinity / femininity 32

3.3 Implications from cultural dimensions 33

4 STRUCTURAL AND RELATIONAL DIMENSION 35

4.1 Structural capital: social interactions and ties 35

4.2 Relational capital: trust, trustfulness, and guanxi 38

4.2.1 Guanxi 38

4.2.2 Trust 42

4.2.3 Shared characteristics of trust and guanxi 43

5 METHODOLOGY 46

5.1 Research method 46

5.2 Interviews 47

5.2.1 Interviewees 48

5.3 Reliability and validity of the research 49

6 HONG KONG AS SPECIAL ADMINISTRATIVE REGION 51


5/111

6.1 Hong Kong society 51

6.2 Hong Kong economy 52

7 RESULTS 547.1 Cognitive adjustment 56

7.2 Structural adjustment 59

7.2.1 Host acceptance 59

7.2.2 Social interactions with hosts 62

7.2.3 Structural capabilities adjustment to the differences 68

7.3 Relational adjustment 73

7.3.1 Components of success 747.3.2 Guanxi and trust in Hong Kong 77

7.3.3 Relational capabilities adjustment to the differences 82

8 CONCLUSION 88

9 EPILOGUE 95

REFERENCES 97


6/111

1 INTRODUCTION

This master's thesis concentrates on the workplace adjustment aspect

of an international assignment. This study was made during the autumn

2005 spring 2006. The study identifies relevant issues from a theory

and applies them into a case scenario.

1.1 Overview

Due the consistent trend of globalisation, corporates are forced to send

their employees across the nation boarders more today than they were

yesterday. Modern managers are required to be able to function

effectively in other cultures - think globally, but act locally. For an

individual employee an international assignment might form to be a

highly stressful experience. Work life, as well as life in general, is

always different in a new country (Wang & Kanungo, 2004). Adjusting

oneself to an unfamiliar work environment is crucial for successful

expatriation (Tucker et al., 2004).

A need for an expatriate may be well planned or sudden. In any case,

sending competent people is, or at least should be, top priority. That is

why reasons to send particular employee vary. Expatriation might be a

result of individuals superior knowledge, technological competence,

personal contacts or just simply a result of being in the right place at the

right time. (Oddou, 1991, 302.) It looks like organisations try to send the

best and the brightest to fulfil international assignments, only to find out

that expatriates run into difficulties after a while (Cassiday, 2005, 2). It

remains clearly a challenge that employee transfers are conducted

effectively and that expatriates can meet the demands of their foreign

assignments (Breiden et al., 2004).

1


7/111

Different sources imply that sending an expatriate is costly and it

becomes even more so if the employee returns prematurely. (Sun &Gentry, 2005.) Interesting indication from the research of adjustment

literature is that inability to adjust to the foreign environment is the major

factor for ineffective performance of expatriate, instead of commonly

presented assumption of the major role of the lack of technical

competence (Andreason, 2003, 56). If expatriation is so important and

costly for the sending company, why so many keep failing is a question

presented by multiple authors (see for example Shaffer et al., 1999; Bell& Harrison, 1996). In addition, it is argued that the high rate of turnover

results in a loss of knowledge, insight and creativity not only for the

individual but also for the company if the failed expatriation ends to an

employee disclaim. Networks formed during the international

assignment may no longer exist, which is also a big loss for companies

seeking global competence. (Cassiday, 2005.)

Holden (2001, 156) is noting that we are now in a knowledge era where

cross-cultural teaming is central for the practice of knowledge

management internationally. He claimed that cross-cultural learning,

interactive networking, and knowledge acquisition among knowledge

sharing are highly important for the practical purposes in modern

international business world. Thus, in a case of expatriation, it is not

enough that a person is competent only with his job. He must be

competent also in some other levels. Working and working effectively

matters for the results. When an employee reaches the host country, he

will become a member of a new social network. This network of people

has soaring impact for the results. (Shaffer et al., 1999.)

This thesis work concentrates into the intra-firm person-to-person level

communication in Finnish companies operating in Hong Kong.

International adjustment literature approaches expatriation from many

2


8/111

different aspects and Hong Kong, as a case country, adds interesting

view to the matter. Hong Kong is not considered as a part of China by

either its laws or customs. Hong Kong has become a service sectorwhere thousands of multinational companies are looking their way to

Asia or away.

1.2 Objectives

The thesis comprises of a theory and an empirical part. The theory part

is a review to a current relevant literacy, to which the empirical study is

built. The objective of the theory part is to gather information of how

social capital is created and what factors affect on that. This information

is used to analyse empirical data gathered from a group of Finnish

expatriate managers currently working in Hong Kong.

The contribution of this study is to identify the way how exactly social

capital theory could add extra value to the international workplace

adjustment models and furthermore, how social capital is created

especially in the Finnish Hong Kong context. International environment

does place special demands for perceived individual success due the

existing cultural distance. The concept of creating social capital in this

context is created based on published studies of social capital and

international adjustment.

This thesis work aims to investigate various aspects of expatriate

manager's general work adjustment, perceived performance predictors,

and personal competencies that expatriate use and confront in

adjustment process in order to succeed in expatriation as good as

possible. Approach is intra-firm instead of commonly used inter-firm.

Intra-firm approach allows us to understand particularly workplace

behaviour in a foreign culture. The issue of expatriation is approached

3


9/111

from a social capital view. Based on that view the study determines a

group of aspects that a sending company and chosen expatriate should

keep in mind. The core thesis in this study is that social capital plays animportant role in successful international assignment.

Social capital is a part of human capital and it has a great value in

creating a successful work environment because it specifies structure

and quality of a relationship network (Ghoshal & Gratton, 2003). For the

studies related individuals, social capital is the contextual complement

to human capital. Stressing mainly social capital, rather than humancapital, takes into account the social context where individuals are

acting. (Liao & Welsch, 2005, 348.) Researchers have studied social

capital in different contexts and with different ways. Accessing

international workplace adjustment through it is a new perspective,

though (Pelling & High, 2005). By reviewing social capital literature this

thesis will demonstrate that particularly Nahapiet and Ghoshals (1998)

three dimensional model of social capital could turn to provide useful

insight into the matter of adjustment into an international assignment.

Thus, extending international adjustment literature and giving social

capital theory a supporting role in it.

To implement the study into practise the restrictors and the adjustment

assistants of social capital and the actual job performance predictors,

useful for creating social capital in international assignment, are

approached. The topic is empirically studied by looking into perceived

correlation and, more importantly, differences of how dimensions of

social capital are approached in Hong Kong from the Finnish point of

view. This is done by interviewing selected Finnish expatriate managers

working currently in Hong Kong. The three dimensional model of social

capital is used as a tool to reflect and analyse collected interview data.

Table 1 specifies the research outline.

4


10/111

Table 1. The research questions, sub questions, and objectives ofthis study

MAIN RESEARCHQUESTIONS SUB QUESTIONS OBJECTIVES

a. How international workplaceadjustment can be accessed byusing social capital theory?

Find out what social capital isand how it influences to theinternational workplaceadjustment.

1. What extra valuesocial capital theorycan add to theinternational workplaceadjustment models?

b. What are the specialdemands and issuesinternational assignment placesfor the creation of social capital?

Find out how creation of socialcapital differs, if any, ininternational environmentcompared to domesticenvironment.

a. What are common adjustment

problems and assistants in HongKong?

Determine the problems and

differences a Finnishexpatriate manager couldexperience in Hong Kong.

2. What are

characteristics ofworkplace adjustmentof a Finnish expatriatemanager working inHong Kong from thesocial capitalperspective?

b. What kind of job performancepredictors and personalcapabilities are important whileadjusting into the Hong Kongworkplace?

Create a set of jobperformance predictors andpersonal capabilities thatcould predict success in HongKong.

1.3 Research framework and structure

This thesis work consists of nine sections. These sections can be

further divided into two main parts. Section one is an introduction to the

thesis and to its objectives.

Sections from two to four form the first main part. Section two studies

expatriate's adjustment into a new social network and how this network

is constructed as a part of adjustment process. It will identify

performance predictors that expatriate confront or possess and analyse

the meaning of these aspects in the international assignment. Later, in

the empirical part, these aspects are studied in the Finnish Hong

Kong context in connection with the framework of the thesis. The

chapter will also study social capital in both general level and also how

it is present in international adjustment process. It discusses the current

5


11/111

aspects of social capital and shows how social capital brings value to

the network.

Section three and four study the dimensions of social capital introduced

in second chapter. These sections are based on Nahapiet and

Ghoshal's (1998) multidimensional model of social capital theory.

Section three will concentrate on cognitive aspects of expatriation. The

chapter will study different perspectives of cultural novelty and it

presents a way to study cognitive dimension from a practical view. The

fourth chapter concentrates on last two parts of social capital,introduced in the second chapter: relational and structural dimensions.

In this thesis work international workplace adjustment is divided into two

entities. While other half of international workplace adjustment is based

on Black, Mendenhall, and Oddou's (1991) framework of international

adjustment, the basis of another half of international workplace

adjustment (which is studied in this thesis work) lies on social capital

adjustment mainly focusing in Nahapiet and Ghoshals (1998) three

dimensional model of social capital.

Black, Mendenhall and Oddous (1991) framework is chosen because it

is extensively quoted in international adjustment literature. Haslberger

(2005) says that no noteworthy work has been made in the research

area of international adjustment since Black et al. (1991). However, the

main focus of the thesis is laid on facets of social capital in the

international workplace adjustment. More precise, social capital is

approached by using Nahapiet and Ghoshals (1998) three dimensional

model of social capital, which is also widely discussed as it will be later

demonstrated. Figure 1 indicates consensus of the framework in

relation to the successful international assignment.

6


12/111

Figure 1. The framework for this study

Internationalworkplace

adjustment

The framework of

International adjustment

(Black, Mendenhall, and

Oddou, 1991)

Social capital adjustment

Creation of social capital

The second main part of the study consists of sections from five toeight. Fifth section is the research methodology in which the research

methods and reliability and validity of the research will be discussed.

The next section introduces Hong Kong Special Administrative Region

(HKSAR). The section will cover both Hong Kong economy and Hong

Kong society.

In section seven, the theory is brought to the case scenario.

Expatriation is examined from multiple viewpoints. All three dimension

Structural capital

Networking

(Nahapiet &Ghoshal, 1998)

Cognitive capital

Culture

(Nahapiet &Ghoshal

Relational capital

Trust

(Nahapiet &Ghoshal, 1998) , 1998)

Restrictors & assistants and job

performance predictors of social

capital creation

7


13/111


14/111

an organization or the absence of withdrawal behaviour (Flap & Vlker,

2001, 299). Thus, job satisfaction is out of the scope of this study.

Successful expatriation in this study is approached from the view of

social capital. Incorrect conclusion would be that social capital is the

only factor affecting to the international assignment. For example, this

study does not take under consideration predictors such as politics,

religion, prejudices or individual's general world view nor it studies the

relation of satisfaction to Hong Kong through spent time. All these

matters might as well have their part in the studied matter.

Also the interviews set a group of limitations. First, this thesis is built on

limited amount of interviews (9 participants) and the sample might be

too small in order to assemble solid implications. Second, the interviews

represent interviewees own personal perceptions which are then

reflected to the theory. The thesis discusses workplace adjustment and

it uses expatriate success as an aspect to measure if adjustment has

been as the sending company originally hoped. Due the fact that the

researcher does not have access to the real success factors, such as

economical figures, the expatriate success in this thesis is restricted to

perceived success based on interviewees own perceptions. Third, all

participants were Finnish which limits the perspective to one party's

view.

9


15/111

1.5 Prologue to the international adjustment literature

The theoretical framework of this study consists of concepts of

expatriate adjustment and social networking. Studying expatriate

adjustment is a relatively new research field; researchers started to

approach that concept systematically as late as 1970's. However, there

exists research about this topic from many different aspects such as:

general expatriate adjustment (Black et al., 1991; Haslberger, 2005;

Selmer, 2001; Andreason, 2003; Shaffer et al., 1999) effectiveness

(Shay & Baack, 2004), efficacy, and coping strategies (Lee, 2005). All

these elements can be divided into even smaller elements regarding

perspective. Social networks on behalf are a widely studied matter.

Combinations of these are under-emphasised area in literature, though

(Wang & Kanungo, 2004, 775). Selmer (2001, 171) is pointing out that

only few authors have dealt with western1 business managers and no

study of that kind is known from Hong Kong by the year 2001.

Black, Mendenhall, and Oddou (1991) made attempt to construct a

theoretical framework of international adjustment based on earlier

studies. According to them this topic has been studied since 1970's but

due to the lack of proper theoretical grounding it is hard to locate the

place of the studied topic in the international adjustment literature

(Black et al., 1991, 291). They approach this matter by combining the

international adjustment literature with the domestic adjustment

literature. As a result they came out with a framework consisting of a

three distinct adjustment dimensions: adjustment to work, adjustment to

interacting with host nationals, and adjustment to the general non-work

environment (Black et. al., 1991, 303). According to this scheme the

degree of cross-cultural adjustment should be treated as a

1

Westernis a common generalisation of a Caucasian man or a woman who works inan Asian county. It is not a country specific word, which makes the comparisation ofthe studies difficult.

10


16/111

multidimensional concept rather than a unitary phenomenon which was

previously the dominating view (Selmer, 2001, 170).

Wang & Kanungo (2004) have recently studied expatriate's social

networks in China. In their work they searched for a correlation between

expatriate personal networks and psychological well-being. This

correlation is based on the assumption that establishment of

interpersonal relationships and frequently contacting others via this

network is a basic need for human beings. When entering in a new

country expatriate is cut off from the previous interpersonalrelationships and established social networks and, due to human

nature, he or she is forced to establish new networks. (Wang &

Kanungo, 2004, 775.) This deprivation, in addition to the perceived

uncertainty and anxiety in the new environment, can threaten the

expatriate's psychological well-being (Wang, 2002; Granovetter, 1995)

Wang & Kanungo (2004 786-787) argue that network characteristics

which may have positive influence to the expatriate psychological well-

being are size, cultural diversity, localization, closeness, and contact

frequency of personal network. According to their findings, these factors

have indeed a big influence. Study also confirmed that expatiates from

a different cultural background tend to form different types of networks.

(ibid.)

Selmer (2001) has also studied western business managers. His study

is one of the few about Hong Kong what comes to expatriate managers.

Selmer examines coping mechanisms of western business managers to

determine how those strategies are associated with the expatriates'

sociocultural and psychological adjustment. Important finding was that

all sociocultural adjustment variables were all above mid-level point of

adjustment, demonstrating a certain level of well-being of expatriates in

Hong Kong (Selmer, 2001, 178). In his later study considering previous

11


17/111

international experience he found more evidence to support this

(Selmer, 2002, 79).

Another study of Selmer (2002) concentrates in the international

experience and the expatriate adjustment in the Hong Kong.

Unexpected finding was that experience from other Asian countries had

only very small effect on sociocultural adjustment (Selmer, 2002, 71),

although many authors in literature emphasise importance of previous

experience (Black & Mendenhall, 1990; Carlsson et al., 2005; Mller &

Svahn, 2004), according to Selmer, non-Asian countries did not haveany effect at all. He concludes with an argument that it might be

possible that Hong Kong is unique to the extent that experience of the

"real thing" is the best way to cope and work there. (Selmer, 2002, 83.)

According to Selmer one of Hong Kong's specialty, which should have

effect to adjustment, is the fact that in Hong Kong it is possible, and not

uncommon, to live almost totally protected from the local Chinese

community, since Hong Kong's large expatriate community is mainly

living in separated areas from locals (Selmer, 2001, 179).

Bringing social capital into the discussion of adjustment is new

perspective (Pelling & High, 2005). In their opinion, it is a welcome

addition towards a concern for the behavioural elements of adaptive

action. After all, social capital was started to study from totally different

point of view than expatriate adjustment. Published studies reveal that

discussion about social capital is mostly arisen from one of the three

main stream views. Modern studies of social capital are commonly

following Bourdieu's, Coleman's, or Putnam's groundwork. (ibid.)

Central idea of social capital theory is that networks of relationships

constitute a valuable resource for the conduct of social interactions

(Bourdieu, 1984). Opposed to that, according to the study of Coleman

(1990) social capital is largely unintentional outcome of social

12


18/111

interaction. While both Bourdieu's (1984) and Coleman's (1990) ideas

continue giving starting points to studies it was Putnam's (1993) work

that became most widely used definition of social capital. He claims thatsocial capital is constructed from the features of social life: norms,

networks, and trust. Those aspects enable parties to act together more

effectively to pursue shared objectives.

From Putnam's (1993) work arise also Nahapiet and Ghoshal's (1998)

definition of social capital. They take Putnam's work forward by

introducing three different clusters where social capital is formed:cognitive, structural, and relational dimensions. These three clusters are

analytically separated but Nahapiet and Ghoshal point out that they all

are very much interrelated. Based on earlier literature, at first it seems

that social capital is rather simple concept, but the closer one gets to it

the more slippery is seems to get (Pelling & High, 2005, 310).

13


19/111

2 SOCIAL NETWORK ADJUSTMENT

Expatriation is a matter of adjustment into a new environment. This is

naturally highly dependent of the person itself but literately has

identified also some other factors that have their affects on adjustment

process. In addition to adjustment process developed by Black,

Mendenhall and Oddou (1991), this chapter presents how social capital

is connected to the general work effectiveness.

As already earlier explained, social capital enables participants to act

together more effectively to pursue individual objectives. Although, this

study has not yet addressed that it is easy to claim that social capital

should have some kind of connection with adjustment process and work

effectiveness abroad.

2.1 Traditional adjustment process

Black, Mendenhall and Oddou (1991) compiled their widely quoted

comprehensive model of an international adjustment by reviewing

existing literature from international and domestic adjustment. The

framework provided starting point for different aspects of expatriation

and it is still used to that purpose, as multiple studies indicate (Breiden

et al., 2005; Takeuchi et al., 2005; Andreason, 2003; Shaffer et al.,

1999; Bell & Harrison, 1996) and some studies (Shaffer et al. 1999)

have also deeply tested and supported their model. It is interesting to

note however, that although Black et al. (1991) mentioned the lack of

valid empirical expatriate studies already in their framework, studies

with the same argument is still present according to Breiden, MIrza, and

Mohr (2005, 6). Expatriate adjustment theory has indeed made little

progress over the last decade (Haslberger, 2005). According to

14


20/111

Haslberger (2005) no significant theoretical development has been

created in the field of expatriation adjustment since Black, Mendenhall,

and Oddou (1991).

Black et al. (1991) argue that adjustment to an international assignment

is a construct of three distinct aspects of adjustment: work adjustment,

interaction adjustment and general adjustment.

Figure 2. Framework of international adjustment (Black,Mendenhall, and Oddou, 1991, 303)

INDIVIDUAL1, 2, 3 Self-efficacy

1, 2.3 Relationalskills

1, 2, 3 Perceptionskills

JOB1 Role clarity

1 Role discretion

1 Role novelty

1 Role conflict

ORGANIZATIONCULTURE1 Organizationculture novelty

1 Social support

2, 3 Logistical help

NONWORK2, 3 Culture novelty

1, 2, 3 Family-Spouse adjustment

ORGANIZATIONSOCIALIZATIONSocialization tactics

Socializationcontents

Individual

Accurate expectations

Organization

Selection mechanismsand criteria

Training Previousexperience

Antici ator ad ustment In-countr ad ustment

Mode of adjustment

Degree ofadjustment1. Work

2. Interaction

3. General

The model has two major components. The first one, anticipatory

adjustment, includes pre-entry matters such as selection mechanisms

and expectations of future expatriation based on training and previous

experience. Anticipatory adjustment facilitates the second major

component: in-country adjustment. The term in-country refers to the

phase of the adjustment process which takes place in host country. Thiscomponent consist of four major sets of factors: job factors,

15


21/111

organizational factors, positional factors, non-work factors and

individual factors. The focus of this thesis work lies in individual factors.

According to the model, individual factors (self-efficacy, relation skills,and perception skills) are the only one to affect to the complete degree

of adjustment (with some support from spouse). Another non-work

matter, culture novelty, will affect for interaction and general adjustment.

(Black et al., 1991.)

Self-efficacy is one's ability to believe oneself and to cope effectively in

foreign cultures although great amount of uncertainty is present.Individual who believes his own success is able to use feedback more

effectively and correct behaviour to correspond better to expectations.

(Black et al., 1991, 307.) Self-efficacy is two dimensional: one focus is

on performance achievements and another focuses on interpersonal

relationship development (Andreason, 2003, 53). Shaffer et al. (1999)

were first ones to test the role of self efficacy in adjustment empirically.

They conclude predictably, that none of the dimensions alone did

explain the variance in any of the degrees of adjustment.

Other individual factors, relational and perceptual skills, have also been

suggested to help individuals to interact with host nationals (Black et al.,

1991). Additional to above individual traits, culture novelty seem to

affect to the adjustment as noted before. Culture novelty is the

perceived distance between host and parent country cultures (Varner &

Palmer, 2005). According to studies some cultures are more difficult to

adjust than others and cultural novelty has always role in non-work as

well as work adjustment (Shaffer et al., 1999). Selmer (2002) on the

other hand, presents critique and argues that it is largely taken granted

that the more different the host culture is from the expatriate's own, the

more difficult the adjustment process is.

16


22/111

Moreover, it is suggested that some degree of interaction exists

between work-related and non-work-related aspects of adjustment.

(Shaffer et al., 1999). On this basis, according to Black et al. (1991)framework and additional studies, successful expatriation requires

adjustment in multiple levels. Additionally, supporting the importance of

interaction and general adjustment Wang & Kunungo (2004) emphasise

that expatriate's well-being is depending on social networking

capabilities of individual.

2.1.1 Workplace performance predictors

Tucker, Bonial, and Lahti (2004) mention, that measuring intercultural

adjustment among expatriates is a central concept at the field of

intercultural relationship. Since companies realised the defect of

expatriate failure, there has been increasing attempt to isolate the

criteria that can contribute to the success (Varner & Palmer, 2005, 6).

However, neither a clear and measurable definition nor a valid set of

predictors of expatriate job performance has emerged from studies up

to date (Tucker et al., 2004, 222). A few attempts have been made to

identify and examine the characteristics of expatriates as a whole

(Breiden et al., 2004, 6). Although earlier chapters have proven the

nature of multiple dimensions of expatriation, Bell and Harrison (1996)

proposed that even more emphasis should be put on the individual

differences that an expatriate holds. However, instead of evaluating

personal capabilities, companies are sending expatriates based on

other business elements: product quality and cost sourcing as for

example (Oddou, 1991, 301).

Expatriate preparations have been repeatedly identified in the literature

as being an essential part for a successful expatriate assignment

(Selmer, 2002, 29). The form preparations take is often depended on

17


23/111


24/111

results of the assets to the international assignment are deviating. Not

all aspects have great impact some have a more crucial part than

others and sometimes the impact is not clear at all. For that reason,sorting of skills and aspects based on researchers findings offers a

clearer view.

19


25/111

Table 2. Authors sampling of past research about expatriateperformance predictorsResearcher Positive Impact Minor Impact Negative Impact Unknown Impact

Arasaratnam &

Doerfel, 2005

Empathy, Listening

skills

Au & Fukuda, 2002 Previous local

experience

Previous overseas

experience

Environmental

uncertainty

Carlsson,

Nordegren,

Sjholm, 2005

Experience from

cultural similar

country

Cassiday, 2005 Non-verbal

language

Language training

Costra, McCrae,

1985

Personality factors,

Languageproficiency

Weak host

identification

Dahl & Pederson,

2005

Informal contacting,

Frequent

interactions with

locals

Ethnic majority Ethnic minority

Haslberger, 2005 Sending & receiving

organizations

monitoring

Jun & Gentry, 2005 Flexibility to adapt

cultural norms

Similar personal

values

Mak & Tran, 2001 Intercultural social-

efficacy

Mkilouko, 2004 Cultural empathy,

Synergy leadership

style

Ethnocentrism

leadership style

Mller & Svahn,

2004

Dissimilar country

experience

Professional culture

Ramsey, 2005 Institutional un-

distance, Self-

categorization

Language

proficiency

Selmer, 2002 Cultural minority Cultural majority

Selmer, 2001 Language

proficiency,

Tolerant & problem

focused coping

Emotional stability Sympton focused

coping, Parent

country escapism

Shaffer, Harrison,

Gilley, 1999

Previous experience

Tucker, Bonial,

Lahti, 2004

Believing what one

is doing

General

communication,

Trust in people,

Cultural believes

Wang & Kanungo,

2004

Social network

characteristics

20


26/111

Many assets above are self-explaining. For example, it is somewhat a

fact that verbal language skills correlate positively with expatriate

success but how it does that and in what level is harder to clarify(Ramsey, 2005). Language proficiency in expatriation is a little studied

matter while most authors agree the importance of it. Authors, such as

Selmer (2001) and Cassiday (2005), often note that the field is lacking

tenable studies because the language proficiency factor is hard to

isolate.

Another hardly accessible entity is the affect of ethnics. Researchers(see for example Carlsson, et al. 2005 and Dahl & Pederson, 2005)

often find that being from another ethnic group or from a culturally

dissimilar country makes it much harder for expatriate to adjust. On the

other hand, some researchers (see for example Selmer, 2002 and

Mller & Svahn, 2004) found out that actually, being cultural minority

can help sometimes, or at least, it is not as bad as generally believed.

Personal and personality factors are also represented. Although

multiple authors have dealt with the issue of personal competencies

needed a few result any solid conclusion about what kind of person

expatriate should be. Most studies rely heavily on expert evaluations

and country specific matters on judging what is really important

dimension assumed to be relevant to predict international success. This

seems to be a generally approved approach what comes to the

personality and personal factors of expatriate. (Van Oudenhoven & Van

der Zee, 2002, 680.)

The leader of the community has impact on what kind of atmosphere is

predominant in working environment and atmosphere has impact for

communitys willingness to form network structures (Mkilouko, 2004,

387). Kloppenborg and Petrick (1999) suggest that leaders have a key

21


27/111

role in developing team characteristics, such as ethics, respect, trust,

honesty, courage and responsible to use and share of power.

Mkilouko (2004) has made a study about leadership styles in a

multicultural environment. Dimensions were Finnish European,

Finnish Chinese, and Finnish USA. Ethnocentrism was the most

common leadership style found. It indicates cultural blindness and task-

orientated practices. Often this had come normal way of working and

leaders did not tried to change status quo. Only few of ethnocentrism

leaders pictured themselves as leaders (Mkilouko, 2003, 391.) andcultural blind leadership tends to cause severe problems in the

workplace (Mkilouko, 2004, 389).

Synergy leader was less frequently seen. These managers tried actively

to build personal relationships with the people from other cultures.

Interactions were based on informal negotiations. Relationships were

seen as a primary motor for the communication. To these leaders it was

a common way to think themselves as leaders. Differences between

cultures were noticed and respected. There was no cultural blindness

what so ever. (Mkilouko, 2004, 392.)

Moreover to personal capabilities, previous experience has received

enormous interest in the literature. Previous experience from working

abroad is more anticipatory adjustment than in-country adjustment.

Nonetheless, it is still something that individual possess as Bell and

Harrison (1996) explains2. Bell and Harrison (1996) are narrowing the

comprehensive model of intercultural adjustment (Black et al., 1991) in

2Yet, other before assignment processes, such as training and corporate selection

methods are beyond the scope of this study because those aspects are not in a directrelationship on what competencies individual possess. The goal of training is more inteaching understanding to the future expatriates how their abilities will influence to

adapt new cultures (Gudykunst, 1998, 232).Corporate selection methods on behalf,concentrate on finding appropriate candidates.

22


28/111

their framework where they study effects of bicultural life experiences

on expatriate adjustment. They support Black's et al. (1991) model that

expatriate adjustment is a sum of interaction, work, and generaladjustments. Their main conclusion is that previous experience has

clear and big influence to the expatriate successfulness.

Researchers mostly agree that earlier expatriate experience indeed has

at least some affect to the adjustment process (Black et al., 1991;

Shaffer et al., 1999) but newer studies have indicated that previous

experience is not as important as field have presumed earlier (Au &Fukuda, 2002; Sjholm, 2005). Indeed, these newer studies narrow the

impact of previous experience in a way that only experience from same

or very similar culture has importance. Carlsson et al. (2005) showed in

their study, which was consisting of China, Hong Kong, Singapore, and

Taiwan, that this might be very true especially what comes to Asian

countries.

However, perhaps the most important conclusion about previous

experience in the scenario of this study would be Selmer's (2001). He

conducted a survey about expatriates assigned to Hong Kong and

found out that not even experience from another Asian county was

useful, or had only very minor meaning, in Hong Kong. He concluded

that Hong Kong might be unique to the extent that experience work in

there is truly the best way to help expatriates to cope in Hong Kong

(Selmer, 2001, 83).

2.2 Bringing social capital into adjustment process

Pelling and High (2005) argue that social capital offers us a lens

through which to study social networks and norms. The term itself is

complex. Researchers agree the importance but, on the other hand, the

23


29/111

field is lacking of consensus what social capital really is (Bjrnskov,

2006, 36). Originally Putnam (1993) outlined in his groundbreaking work

that social capital consist of three basic parts: trust, norms, andnetworks. This is still its broad definition although there are many

aspects added after Putnam's work (Pelling & High, 2005, 310).

Social capital is a productive phenomena, it makes possible to reach

certain benefits which would not be accessible without it (Nahapiet &

Ghoshal, 1997, 35). According to Nahapiet and Ghoshal (1997) very

central idea of social capital is that these benefits are achieved by usingsocial network in some way and with some attributes. Therefore, they

are emphasising the importance of networks although they are also

saying that specific definition of the term is hard to find.

To possess social capital a person must be related to others and it is

those others, not oneself, who are the source of advantages (Portes,

1998). Either, the actor does not own his network. Access to knowledge

through networks is temporary and borrowed in the sense that

individual does not possess the resources provided by the network.

Without consistent investments to the network individual compromises

one's social capital and also all the possible knowledge one might

acquire through it. (Glover et al., 2005, 453.) For example, when

expatriate leave home country he is automatically disconnected, or is

able to maintain only limited connection, from many earlier relationships

(Wang & Kanungo, 2004, 775).

Social capital is also suggested to be goal specific, meaning network

structures adopt different forms depending on individuals' intentions.

Generally speaking, this indicates that only particular forms of social

capital are conducive to attainment of a particular goal. (Flap & Vlker,

2001, 301.)

24


30/111


31/111

relational dimension captures the accessibility into the possible

information. (Liao & Welsch, 2005.) Cognitive element is about shared

values and norms that facilitate common understanding and a suitableway to behave (Anderson & Jack, 2002). Nahapiet and Ghoshal (1998)

themselves emphasise the importance of studying the interrelationships

among these three dimensions and the various facets within each

dimension.

Although Nahapiet and Ghoshal (1998) separate those three

dimensions analytically, they recognise that many features are in facthighly interrelated. Dimensions can be studied separately but their

consensus defines the actual benefit of social capital. Each of the

dimensions of social capital has two characteristics in common: first,

they constitute some aspects of the social structure, and second, they

facilitate the actions of individuals within the structure. (ibid.)

In their model of international adjustment Black, Mendenhall, and

Oddou (1991) conclude among other things, that individual skills are

important in every degree of adjustment. Furthermore, the social capital

theory claims that interactions between participants make things

happen (Bjrnskov, 2006). However, Pelling and High (2005) says that

the search for general rules regarding the distribution of different types

of social capital according to social variables has had little success.

They do point out though, that the most common rule of social capital is

that its character depends not only on history but also on the social

context.

26


32/111

3 COGNITIVE DIMENSION

Liao and Welsch (2005) claim that the dimension of social capital, what

Nahapiet and Ghoshal (1998) labelled as cognitive dimension, has not

been discussed in social capital literature nearly as much as other two

dimensions. This was also noted by Nahapiet and Ghoshal (1998, 253)

themselves.

Nahapiet and Ghoshal (1998) took the cognitive dimension into theirclassification because in their opinion, fundamentally, social capital is a

social artefact which means that knowledge and meaning is always

embedded in social context. They said that although new knowledge is

typically created by combining different knowledge and experience and

that diversity of opinions is a way of expanding knowledge, successful

and meaningful communication requires at least some sharing of

context between the parties. (Nahapiet & Ghoshal, 1998, 253.)

Additionally, they also suggest that this sharing might appear in two

ways: first, through the existence of shared language and second,

through the sharing of collective narratives (ibid).

Thus, cognitive capital is a background factor which is deeply

interlocked with other two dimensions of social capital. Many different

aspects of cognitive capital provide powerful means in communities for

creating, exchanging, and preserving sets of meanings. The cognitive

dimension of social capital refers to those resources which "represent

shared understanding, interpretations, and systems of meanings

between parties achieved through shared language, code, and

narratives". (Nahapiet & Ghoshal, 1997, 35.)

27


33/111

3.1 Identifying cognitive dimension

According to Schein (1991) nationality is one of the levels of the culture.

The word culture has wide range of definitions, and point of view about

the concept varies from the studied matter. It is argued that if a

company can identify cultural variables associated with expatriate

success, the selection and training process are more effective therefore

increasing the possibility of success in foreign assignments (Varner &

Palmer, 2005). Consequently, culture's role in expatriation is both self-

evident and studied (Andreason, 2004) but in order to understand which

dimensions are useful in this kind of study, it is perhaps best to

introduce some of the different aspects in order to understand

complexity of culture.

It is claimed that employees from similar kind of cultures are more likely

to form and maintain strong social ties with each others (Manev &

Stevenson, 2001, 296). People from different national backgroundsacquire different expectations about the formal structures of companies

and the informal patterns by which the work is being done. These

expectations then affect the way people respond to unfamiliar behavior

when they work with, negotiate with or generally do business with

people from other societies. (Bell & Harrison, 1996.) Too often cross-

cultural encounters result in misperception, misinterpretation and

negative evaluation of the others cultural intentions and abilities(Sackmann et al., 1997, 25). Cultural patterns are integrated to our

behavior (Schein 1991). It influences our sense making, situation

framing and our abilities to share and process knowledge (Mller &

Svahn, 2003, 225).

Although Davenport and Prusak (1998) found that informal networking

in multicultural environment may require altering of mental programming

in cultural level and that without an appropriate culture, knowledge

28


34/111

sharing is, at best, very difficult and limited (Davenport & Prusak, 1998)

other researches claim that this might not be necessary (Schein, 1991).

In spite of multiple views, it is common believe that the culturalorientation will affect how expatriates cope with certain situations

(Valmer & Palmer, 2005).

3.2 Hofstede's cultural dimensions

Manev and Stevenson (2001) have claimed that cultural distance itself

creates a gap between individuals when networking. Hofstede's (1980)

cultural dimensions are one of the best and most famous cultural

studies known to exist in the literature. It is extensively quoted since it

offers a solid base for many kinds of cultural studies. The categorisation

can be applied to concern a whole national culture or only a workplace

when needed. The cognitive dimension of social capital is accessed in

this study by reviewing Hofstede's dimensions and implications from

them.

The study offers to examine differences and similarities across cultural

boarders by identifying four-dimension taxonomy through theoretical

reasoning and statistical analyses. Elements are: individualism /

collectivism, uncertainty avoidance, power distance, and masculinity /

femininity. In following chapters, these four factors are introduced and

furthermore, discussed how Finland and Hong Kong were rated

according to Hofstede's (1980) study.

Cultural standard theory like Hofstede's (1980) is based on the belief

that problems in international encounters arise from the distance

between cultures and from different cultural standards. With this

assumption, the problems would be predictable, and it could be

possible to learn how to avoid them. However, Hofstede's empirical

29


35/111

identification of four dimensions of cultural values must not be taken

definitive because no cultural study is perfect. Nevertheless, Hofstede's

work represents the best available attempt to measure empirically thenature and the strength of value differences among cultures. (Lustig &

Koester, 1998, 111-113.)

In following subheadings Hofstede's four cultural dimensions are further

explained and Hong Kong's as well as Finland's scores are brought

forth. Scores are displayed as Lustig and Koester (1998) adopted them

from Hofstede's original study.

3.2.1 Individualism / collectivism

In an individualistic culture employees are expected to act according to

their own interest. This means that the work should be organised in a

way that the self-interest of the person is somewhat the same as the

employer's interest. In a collective culture, the employee will act

according to the interest of an in-group to which he or she belongs to.

(Hofstede, 1993, 63.) In individual culture, ties between individuals are

loose and they value personal time and personal accomplishments.

Collective cultures, on the other hand, finds people integrated to strong

groups and value the groups well-being more than individual desires.

(Hofstede, 1980.)

Studied countries were given an individualism index which varied from

U.S.A's 190 to Guatemala's -147. The average score is zero. In this

range, Finland's score is 79 and Hong Kong's -72. High positive score

means the country prefers individualism. (Lustig & Koester, 1998. Ref.

Hofstede, 1980.) According to these numbers Finland is substantially

more individualistic than Hong Kong. This means that Finnish people

30


36/111

prefer to act more according to their own interests instead interest of the

group. Hong Kong people prefer to act vise versa.

3.2.2 Uncertainty avoidance

This indicates in which extent members of a culture feel threatened by

uncertain or unknown situations. Uncertainty avoidance is related to

anxiety, need for security and dependence upon experts. (Hofstede,

1980, 110.) A culture with high uncertainty avoidance will be rule

orientated and prefer employment stability (Hofstede, 1980). In addition,

in a strong uncertainty avoidance country, people like to work hard and

they also want to appear to be busy all the time. On the other hand, in

the low uncertainty avoidance countries people are also able to work

hard, but only when necessary. (Hofstede 1991, 120-122.)

Singapore got the lowest score of -239 and Greece highest 193. The

average score is zero. Finland's score is -27 and Hong Kong's -157. A

large negative number means the country does not prefer to avoid

uncertainty. (Lustig & Koester, 1998. Ref. Hofstede, 1980.) Numbers

indicate both countries to avoid uncertainty but Hong Kong much more

than Finland. This means that they believe in minimising the number of

rules that govern social conduct and human behavior and they tolerate

people who behave in ways considered to be socially deviant.

3.2.3 Power distance

According to Hofstede (1991) Superiors and subordinates consider

each other existentially unequal in a large power distance cultures.

Organisations centralize power in a few hands by strong hierarchical

structures. Subordinates are expected to be told what they should do.

Superiors without consulting subordinates make decisions. There are

31


37/111


38/111


39/111

individual (Ford & Chan, 2003, 14). According to Cassiday (2005) this

might be very true in Chinese cultures. Also, in a case of a conflict,

individualistically orientated people are more likely to leave from anexpatriate assignment since they usually weight individual goals and

opportunities more important than company goals (Varner & Palmer,

2005). Collective cultures on the other hand, can find knowledge

sharing easier because group harmony is more important than

individual success. High masculinity cultures knowledge sharing is

prevent if competitiveness is individual based. Finally, problem with high

power distance cultures arises from high hierarchy system. Knowledgetends to flow from top to down and free knowledge flow vertically is

staunched. Knowledge in low position in hierarchy is usually low

valuated. (Ford & Chan, 2003, 14-15.)

Expatriates own cultural background has great influence how

successful the assignment can be. Therefore, analysis of one's own

culture should be part of expatriate's cultural self-knowledge before and

during the foreign assignment (Varner & Palmer, 2005.)

In sum, people from different national backgrounds acquire different

expectations about the formal structures of firms and the informal

patterns according to which work is done. These expectations then

affect the way people respond to unfamiliar behaviour when they work

with, negotiate with, socialize with, or do business with people from

other societies (Sackmann et al., 1997, 25). Since it is proved that

norms and values tend to vary across cultures Doney, Cannon, and

Mullen (1998) are concluding that also the processes that are used to

form trust between actors may depend heavily on culture.

34


40/111

4 STRUCTURAL AND RELATIONAL DIMENSION

The structural and the relational dimensions of social capital are

combined under the fourth chapter. These two dimensions differ from

the cognitive dimension in the extent that they both have been part of

the concept of social capital longer time period than cognitive

dimension. Parts of cognitive dimension has been previously

undistinguishable part of cultural studies but interest to affiliate cognitive

dimension to social capital theory was rarer before Nahapiet andGhoshal (1998) discussed about its role. Structural and relational parts

of social capital theory on behalf are the initial and fundamental parts of

social capital theory. (Nahapiet & Ghoshal, 1998.)

4.1 Structural capital: social interactions and ties

Among other things, individual goals are achieved by using personal

networks (Flap & Vlker, 2001, 300). The structural capital develop

social capital through the ways in which its various perspectives give

access to parties to the specific network for exchanging knowledge

(Nahapiet & Ghoshal, 1998).

These knowledge flow networks keep communities together, whether

people are aware of them or not (Zhuge, 2005). Person who has

complex and vast network can get more information will get it faster and

more reliable (Flap & Vlker, 2001, 302). Wang and Kanungo (2004)

argue that expatriate's networking is an under-emphasised area in the

literature. Their paper not only brings social network perspective into

expatriate adjustment literature, but also proves the importance of such

networks. By reviewing literature, they end up to a hypothesis that

network characteristics which might have influence to the expatriate

35


41/111

psychological well-being are: size, cultural diversity, localization,

closeness, and frequency (Wang & Kanungo, 2004, 778). Their findings

partially support this hypothesis. Maintaining social network individualnetworking skills are needed. Individuals' themselves create boundaries

of networking by their own actions. Understanding network structure

and the skills needed for building it as well as developing those skills

are important. (Hastings, 1995.)

Although, Wang and Kanungo's (2004) study considers the whole

network of expatriate instead of only workplace, the aspects of theirstudy are good to review and to remember.

Size is the basic determination of social network. It is the total number

of local friends, colleagues and peer expatriates. It is reasonable

enough to imagine that broader the network is the more support

expatriate receive in every aspects of life. (Wang & Kanungo, 2004,

777.) Diversity of the network is defined as how many different kinds of

actors exist in the total size of network (Wang & Kanungo, 2004, 778).

Diversity can also be seen as cultural diversity; in what extent network

comprises both local nationals and peer expatriates (Wang, 2002).

Localization is defined as to the extent expatriates have local nationals

in their personal network. This aspect is unique to the expatriates. It is a

common believe that social support from locals is important ad to the

expatriate complete adjustment process. (Wang & Kanungo, 2004,

778.) Closeness refers to the relationship and the amount of emotional

intensity between expatriate and network participants and frequency

represents number of connections in certain time period (ibid).

Last two aspects are in relation with weak and strong ties presented

first by Granovetter (1973). People with strong ties think the same way

and network provides high level of trust, communication, and emotional

36


42/111


43/111

4.2 Relational capital: trust, trustfulness, and guanxi

Great amount of research highlights the significance of the relational

dimension of social capital. According to Nahapiet and Ghoshal (1998,

254) relational dimension of social capital is developed between

individuals through time. These personal relationships form from a

history of interaction and how those interactions took place. Relational

capital focuses relationships people have, such as respect, trust,

trustfulness, and friendliness. (Liao & Welsch, 2005.)

Main difference of relational and structural capital is that structural

capital might be necessary for acquiring potential knowledge but

relational capital captures the accessibility. This is the amount of

knowledge an individual can actually exploit from the network. (Liao &

Welsch, 2005.)

4.2.1 Guanxi

Chinese business and managerial practices are still been guided by old

Confucian values such as: filial piety, industriousness, the saving of

face and networks of personal relationships (Ramasamy et al., 2006,

130). Chinese personal ties, known also as guanxi, is often been

regarded as a key element in the success in East Asian business.

However, Chow and Ng (2004) are arguing that very little is known from

the characteristics of guanxi. (Chow & Ng, 2004, 1075.) In the same

article they also point out, that the few studies about guanxi network are

not comparable as there is no consistency in how guanxi is defined. In a

nutshell, it could be said, that guanxi is all about the cultivation of long-

term personal relationships (Ramasamy et al., 2006) and it refers to the

establishment of a connection between two individuals to enable social

and personal transactions (Yeung & Tung, 1996).

38


44/111

Guanxi may also appear in other places than only in mainland China

(Ramasamy et al., 2006) and in support to this argue, Chow and Ng,(2004) and Davies et al. (1995) have indeed found evidence of guanxi

in Hong Kong. Ramasamy's et al. (2006) study is an inter-firm study

proving that guanxi is strongly present in that level also. Davies et al.

(1995) are continuing that "without guanxi, one simply cannot get

anything done." This conclusion was made based on data collected

from Chinese managers in Hong Kong.

According to the study of Ramasamy, Goh, and Yeung (2006) there are

three components utilizing guanxi: trust, relationship commitment, and

communication. Their study concludes that from these components

most important are trust and communication. Both of those aspects are

seen highly important for relationship building around the globe,

regardless players' nationalities (Tucker et al., 2004) but Ramasamy,

Goh, and Yeung (2006) see the meaning of trust and communication to

be even more important in Asian countries than elsewhere.

Due the dispersed nature of guanxi, few authors conclude their study

into actual definition of it. More popular view to the matter is reviewing

the advantages and disadvantages and also how guanxi diverges from

the western personal networking. A Table 4 collects main differences

between guanxi and western personal networking based on the work of

Ramasamy et al. (2006), Chow and Ng (2004), Fan (2002), Fock and

Woo (1998), Yeung and Tung (1996), Simmons and Munch (1996), and

Davies, Leung, Luk and Wong, (1995).

39


45/111


46/111


47/111

4.2.2 Trust

The type of trust here is restricted to trust between two persons or small

group of individuals leaving out other types of trust3. According to

Blomqvist (2002) trust includes four important components: capability,

goodwill, behaviour, and self-reference, as shown in the figure 3.

Figure 3. Components of trust Blomqvist (2002)

Trust

Capability

Goodwill Behaviour

Self-reference

Capabilityconsists of technological capability, business capability and

meta-capability to cooperate. It is relative passive component of trust.

Goodwillis a very important and active component of trust. It is a rather

abstract thing and can be seen as moral responsibility or positive

intensions toward each other. Goodwill consists of gestures, behaviour,

care, and concern. (Blomqvist, 2002.) Tyler (2003) is in the same path.

He represents motive-based trust to be a huge influence to workplace

satisfaction. Social based trust is based on the motives of others rather

than predictability or competence of other parties (Tyler, 2003, 559).

People should trust that others intent to do good for them. For example,

it is impossible to evaluate pilots competence to fly a plane, but one

3Trust has received a great deal of attention and it has been defined in extremely

multiple ways in the literature of sociology, psychology as well as in economics. Eachresearch line offers unique insights into the nature of trust and the process how itdevelops and they are not comparable (Doney, Cannon, Mullen, 1998)

42


48/111


49/111

altogether making future transactions unlikely (Standifird & Marshall,

2000).

Although, the concepts of trust and guanxi are somewhat different they

both share at least one similarity: it is developed through time (Davies,

Leung, and Wong, 1995). Blomqvist (2002) introduced useful concept

how trust is developed through time. According to her, it is rather a slow

process, which evolves through interaction, investments and

experiences. It is an outcome of a process. Thus, trust between

individuals is a bridge between experiences of the past and predictionof the future.

Figure 4. Trust seen as a bridge between experiences and future(Blomqvist, 2002)

Past experience

Reputation

Current interaction

Experience

Prediction

Of future behavior

Increasing satisfaction

and propensity to trust

There is evidence that people from different groups, such as different

regional area or different demographic categories, tend to view each

others with distrust and suspicion (Williams, 2001, 377), which

multicultural working environment often is. On the other hand, it also

looks like individuals start relationship with low level of trust regardless

of their similar or dissimilar backgrounds (Williams, 2001, 391). Dirks

and Ferrin (2001, 453 454) have studied the main effects of trust to

the workplace behavior and, according to them, the positive correlation

between trust and work outcomes is clearly visible. However, it is

proved that having only trusting ties with other members in network is

not enough by itself to produce satisfaction with the social side of the

44


50/111

job (Flap & Vlker, 2001, 315). Among other things, for example right

attitudes are also essential. Attitudes reflect the things people are

motivated to do, such as, enjoyment of work and commitment to group.(Tyler, 2003, 563.)

Trust has also its effect to how organisation sees the importance of

control and level of hierarchy. There is a studied relation between trust

and control. However, controversy ideas have been presented. Many

consider trust to be a substitute to control because trust reduces

transaction costs. The higher level of trust in relationship, the lower isthe costs of control mechanisms (Smith & Barclay, 1997.) Some see

trust and control to be complementary. This is due to the observation

that violations of trust is more likely to happen when competition gets

harder and those violations can lead to dramatic consequences.

(Bijlsma & Koopman, 2003, 543.)

Helbing, Ammoser, and Khnert (2006) have recently studied the

relationship of hierarchical networks to the organisation knowledge flow.

Hierarchical networks are best solution to the knowledge flow only when

the failure rate of nodes and links is negligible and when organisation is

or is recovering from a crisis (ibid). Furthermore, hierarchical

organisation works well only when it's all aspects work perfectly and

there is enough time for information transmission (Helbing et al., 2006,

149). Informal networks are important because they prevent the loss of

important knowledge flow and top-bottom and bottom-up

communication. They argue, that lower hierarchical rate in the

organisation can improve the information flows considerably.

45


51/111


52/111


53/111

Whether use an unstructured or a semi-structured interview format is

always matter of wanted results. According to Rubin and Rubin (1996)

many qualitative interviews is constructed from both formats but thebalance vary between them. The balance of this study lies greatly on

semi-structured format: The interviewer introduces the topic, and then

guides the discussion by asking specific questions (Rubin & Rubin,

1996, 5).

This study will mix storytelling with semi-structured interview method.

By asking for stories, a study will obtain rich narratives to be used inanalysis of the research work. Commonly speaking, these stories

concern incidents which left great impact on subject's behaviour. In

other words: "critical incidents". In the form of a story, the respondent is

encouraged to talk about issues that might otherwise be too sensitive.

(Geer et al., 2004, 328-329.)

A semi-structured interview questionnaire was designed with reserved

answer time for storytelling as well as specific questions. The focus of

the questionnaire was on determining differences in the host country

from the aspects of structural, relational, and cognitive dimensions.

Interview was concentrating into these aspects through interviewees

own perceptions and experience.

5.2.1 Interviewees

15 Finnish managers currently working in Hong Kong were contacted.

Nine of them replied their willingness to participate to the study.

Interviews were made in Hong Kong during the March 2006 May

2006. Each interview lasted 6080 minutes. One interview round was

made. The interviews were held in Finnish and then were translated into

48


54/111

English, which may conceivably cause a slight divergence in the

meaning from that originally intended by the interviewee.

Represented companies were typically small or mid-size businesses but

a few multinational corporations were also represented. Regardless the

company size all interviewed expatriates were working in an office

where average amount of personnel was six.

Table 5. Interviewees

Manager Position Time spent in HK /~years Date of interview

A Managing Director

(Asia Pacific)

9 13 March 2006

B Managing Director

(Asia Pacific)

1 29 March 2006

C Director 7 3 April 2006

D Office Manager 2.5 11 April 2006

E Country Manager 1 21 April 2006

F Account Manager 1.5 27 April 2006

G Sales & Marketing

Director

4 28 April 2006

H Managing Director 7 2 May 2006

I Sales Director 3 8 May 2006

5.3 Reliability and validity of the research

In a qualitative study, the researcher is one of the most important

research instruments. When the reliability of a qualitative study is

evaluated, the main criterion is the researcher himself. This means that

evaluation affects the whole research process. (Eskola & Suoranta

2003, 210.)

49


55/111


56/111


57/111


58/111

Hong Kong is dependent on international trade. Its natural resources

are limited, and food and raw materials must be imported. Hong Kong's

concept of free market has succeeded to create a proximately 34 000US$ GDP/per capita - being worlds ninth highest. (CIA, 2006.)

53


59/111

7 RESULTS

In this section, the empirical data, collected from Finnish expatriates

working in Hong Kong, is presented and analysed. This part of the

study is divided into three entities. The first, the second, and the third

chapter each concentrate on one part of social capital in expatriation:

structural, relational, and cognitive dimensions. Each chapter begins

with a presentation of how the Hong Kong work environment is different

from the Finnish work environment. The latter part of each chapterdiscusses possible reasons why things are done differently and how it

would be possible to cope with the kind of environment present.

When sending an expatriate, every participant should keep in mind that

in some extent, employee and employer have different goals (Oddou,

1991). What is a good experience to an employee might become very

expensive for the company.

"In my opinion, the culture: you can't and you shouldn't tryto memorize it. That's impossible. But, you should check abit where you get yourself into. Perhaps the best way is tocome here for a visit and keep your eyes open... That givesyou some perspective. There is also nothing to be shamedon to keep the idea in your mind that you might returnhome earlier than first expected. Above all, it's ok if you dothat because the fact that you came here and checked it

out is fantastic and respectable." (Manager G, 28 Apr2006.)

In that case, a company looses not only money but also employee's

knowledge, insight, and creativity. Moreover, networks formed during

the assignment may no longer exist. (Cassiday, 2005.) Avoidance of

described unwanted situation is crucial for any company.

Selmer studied western expatriate managers in Hong Kong at the years2001 and 2002. In both of his studies he found out that most of the

54


60/111

expatriates were at least somewhat adjusted into Hong Kong society.

According to the data collected for the purpose of this study the same

conclusion can be made. Every interviewee felt that they are welladjusted into the working environment of Hong Kong and most agreed

that adjustment is relatively easy, apart from some cultural differences.

Hofstede's (1980) study showed us the cultural distance of Hong Kong

and Finland, which indeed is very high. In the forthcoming chapters

these "cultural differences" will be tried to identify and to examine in

what extent these differences can actually affect to the individual

adjustment into working environment of Hong Kong.

It is good to emphasise that Hong Kong people, despite their ethnical

backgrounds, must not be associated with mainland Chinese as also

Selmer (2001) notes. Also, all kinds of stereotypes are suitable only to

boost negative expectations. According to Hansen (2003), the term

stereotype in a way represents a "sight barrier" that is not individual but

collective. Stereotypes could be described as standard prejudices that a

collective has about itself or others (Hansen 2003, 322-333). Tienari &

Vaara (2004) says that stereotypes are flexible and indefinite, and they

can be used in the construction of national uniqueness in a way that

promotes a positive self-image of the members of the nation. For

representatives of other nationalities however, the same stereotype can

contain completely different conceptions, loaded with questionable or

even negative attributes. (Tienari & Vaara 2004, 59.)

Perhaps due the ethnics of Hong Kong people and the fact that 30% of

people living in Hong Kong are mainland Chinese, interviewees tend

easily to talk about Chinese stereotypes, although they also

acknowledge that Hong Kong people are different from mainland

Chinese. The word "Chinese" is also often used as a synonym for both:

mainland Chinese and Hong Kong Chinese. This might lead into a miss

understanding. As Osland et al. (2000) put it: People who are working

55


61/111

across cultures are often surprised by cultural paradoxes that do not

seem to fit the descriptions they have learned before. Hansen (2003,

326-327) believes that the characteristic problem of intercultural contactis not the awareness of intercultural differences but rather the

understanding of them.

7.1 Cognitive adjustment

The core idea of the cultural aspect of cognitive dimension is that

cultural distance itself creates gap between individuals when networking

(Manev & Stevenson (2001). Hofstede's (1980) cultural differences

classify Finnish and Hong Kong culture very differently. Basically, in

every aspect Hong Kong culture should be more reserved, introverted,

and control orientated. Despite often presented critic, Hofstede's (1980)

cultural differences are widely noted and quoted in the literature and

even this study found similar aspects about the two cultures as

Hofstede did. Hence, studying differences in this case is irreverent

because that work is already dealt throughout in the literature. In the

light of the collected data, Hofstede's views about cultural differences

are supported.

However, one particular interesting point was found. Each one of the

respondents described the gap between cultures to be quite large but

no one saw that as a problem. This might be due the inability of an

individual to recognise what is related to what but nevertheless cultural

differences was not experienced to be the reason why something would

go wrong or something might work. Interviewees emphasised that

individuals are those acting in the culture.

"...The cultural know-how...it comes kind of

automatically...people come from the same country butthey act differently. One can't generalise too much...Some

56


62/111


63/111


64/111


65/111

different views depended the environment new expatriate stepped into.

The expatriates which came to an existing organisation all indicated that

personnel were very open minded and easy to cope with. "They [Hong

Kong personnel] have learned how we, as a Finnish company,

work...some of the people here have worked for the company almost

ten years." (Manager E, 21 Apr 2006.) Another respondent explained

that "...and there have always been some westerns here in our

company so people are used to us and our ways." (Manager F, 27 Apr

2006.)Some even said that they can not see any difference how locals

treat them when compared the first moments to the present situation.

The Finnish who came to Hong Kong to establish a branch office or a

new company see this matter differently. Towards them, Hongkongers

tend to get harder to approach. However, usually things got much

easier if initial part of the expatriation went well.

"You can take the word "Finnish expatriate" away fromyour question. It does not matter from where the westerncomes from. These people are very careful at first."(Manager H, 2 May 2006.)

"At the beginning...the most difficult task was to assurelocals that we are seriously extending our business intothis area and that we are serious with this new branchoffice ...After we got over that, there were no problemsanymore."(Manager B, 29 Mar 2006.)

Kim (2001) debates about short-term and long-term adaptation. He

claims that people who reside in a new culture for a long, indefinite

period are likely to be more committed to adapting than temporary

sojourners are. Also, and maybe more importantly, hosts may not

expect culturally appropriate behaviour from short-term expatriates in all

situations; mistakes are often forgiven as long as the expatriate appear

interested in or respectful of the host culture. Kim (2001) also notes that

this works also another way around; hosts tend to expect greater

60


66/111

cultural conformity and efficiency from expatriates staying for longer

time periods, and may react negatively when their expectations are not

met.

The data shows that Hong Kong people, indeed, hold western people in

a different kind of position comparing to locals themselves. From where

the western comes from does not seem to make any difference, though.

Positive discrimination, as one interviewee calls it, starts from common

everyday matters and it is actually perceived helpful in work related

matters also.

"For example, our suppliers and even clients can be muchharsher to a local than to us... I think that many times I cango to talk to very important people very easily just becauseI am a westerner...and meetings are easier to arrange."(Manager I, 8 May 2006.)

"If we want to meet our customers top manager it is betterthat there is an expatriate present, doors open mucheasier."(Manager C, 3 Apr 2006.)

One interviewee describes positive discrimination at the office by giving

more specific example which shows that western business managers

are treated in different way than locals.

"Locals are grown up with the authorities but we, on theother hand, are thought to think with our own brain (, if the

expression is allowed). That is the big difference. If I feelthat today I can leave half an hour before closing hour I willdo that and it's no biggy. But local worker! He will be hereeven until very late hours just to show how good employeehe is. We can do this and these locals are not judging usbut if a local leaves earlier than he should, others mightgive an evil eye... I am not sure where this derives,though...One thing is sure: westerns have somedispensation here."(Manager F, 27 Apr 2006.)

61


67/111

On the other hand, being a part of a group, which usually tends to stay

only limited time period, could turn to be also an obstacle itself, as Kim

(2001) claims.

"I have noticed that these locals, they think that we[expatriates] come here for a few years and then wedisappear anyway...so who cares, we [locals] do what they[expatriates] say and they [expatriates] do what they want."(Manager F, 27 Apr 2006.)

"Most of those expats, they come here for a year of two.

There is no point to create more profound relationship withthem. One does what those people tell them to do. It's sosimple ...but if you are like me, being here longer time, andyou show that you appreciate their culture and lifestyle,then you can develop something deeper...You are like anormal person among others."(Manager H, 2 May 2006)

Although some people experienced difficulties at the beginning in the

new culture most still felt relatively warm in Hong Kong after some time.

It does make a positive difference however, at least at first, if expatriate

comes to an existing organi

TMP.objres.392.pdf

Documents

Transcript of TMP.objres.392.pdf